While the overall response to the GDP report was positive today, unless we see immediate upside on Monday, it appears that today's rally will end up being a 3 wave affair which means that the current pullback has more to go either in time or price before the rally can move higher. One thing that does stand out is that the character of the pullback is definitely corrective, so we are still looking for higher prices in August, even if they do not meet the expected targets.
The NYSE Summation Index has yet to show any sign of weakening and has moved well above the critical +400 level that marked the top of previous bear market rallies and bull market declines. This provides additional support for the view that the rally has more room to run.
At the moment I am only 40% long on index positions and it is hard to see adding more until the Qs are able, or appear to be ready, to take out the January high at 46.64. The Bullish Percent Index for the Nasdaq Composite is still standing below 50 at 47.73. This is hardly a ringing endorsement for the rally.
I still see the rally moving higher into late August. A new rally high would leave 5 overlapping waves, which would imply 7 waves to finish a double zigzag, which is beginning to look like the probable outcome. The Cabot Trend is still on a sell, but most of the trend following strategies are on a buy or neutral. The Weekly/Daily strategy will go long next week on a new rally high.
I think all there is to do for now is sit tight and wait for opportunities to sell in August.